What is Umbrella Insurance?

There’s a big misconception that if you’re wealthy, with extensive assets, then you obviously will need a robust insurance policy with high liability limits. If you have a modest income, with only your home and vehicle to your name, then the liability insurance included in your auto insurance and homeowners insurance policy is enough.

That is not the case. You don’t need to be wealthy to find yourself being sued for far more than your net worth. Umbrella policies are designed to provide extra liability protection for the unexpected, regardless of your income and assets, to protect all your assets, and future income.

Umbrella Insurance is There for the Rainy Days

Umbrella insurance is a special type of insurance coverage that protects you from lawsuits and claims that go beyond the limits or scope of your other liability insurance. It protects your assets and your financial outlook by extending the liability coverage on your homeowners, renters, auto or boat insurance when your limits are exhausted. It also provides coverage for claims that may not be covered by other liability insurance.

Umbrella Insurance Covers You Completely

Your liability insurance is there to protect you. When it comes to your auto insurance policy, the liability insurance is what pays out for the damages that the other driver faces if you’re responsible for a collision. Your liability on your homeowners and renters insurance does even more: not only does it pay for any injuries that someone may get while on your property, but it can also cover damage caused by your children and even legal fees if you or someone else on the policy is sued for causing bodily harm or property damage to someone else.

Obviously, your liability insurance is an important safety net, so have you ever wondered what would happen if you exhausted the limits of your policy?​

Who Needs Umbrella Insurance?

Umbrella insurance policies are for everyone, particularly those who:

• Have pets
• Own a vehicle
• Own rental properties
• Entertain house guests
• Perform volunteer services
• Engage in any kind of activities with other human beings
• Use social media or allow their children to post on social media
• Own or rent watercraft, ATVs or other types of recreational vehicles

If any of these apply to you, then you may be at great risk for needing protection if you ever need to file a liability claim, or ever face a lawsuit not covered by your liability insurance.

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Why Do You Need Umbrella Insurance?

Life is unpredictable. Your generally friendly dog bites a stranger and causes an injury or emotional trauma. Your child posts something that is considered libel on a social media platform. You own a rental home and your tenant’s dog causes an injury and you’re being held legally responsible for injuries. You are walking down the street, accidentally bump into someone causing them to fall causing injuries.

These are just a few scenarios in which the liability coverage included in your homeowners/renters liability insurance coverage could pay out for damages incurred. But many of these policies are limited to $100,000 or $300,000 which may only be a fraction of what is needed in the event you are liable. Even if you are found to be 1% liable, you are still liable. Same situation with an auto collision. If you are found to be “at fault” and the injured party’s medical bills are greater than your liability coverage, how are you going to pay for above and beyond your auto policy liability amounts? If you are found “at fault”, you are responsible for all their pain, suffering, lost wages, damages, and medical bills. Your assets and future wages are/can be exposed in the event of a judgement.

Unfortunately, your existing liability coverage may not be enough, leaving you vulnerable to financial hardship if a settlement exceeds your liability limits. A personal liability insurance umbrella policy helps to bridge that gap by providing much needed extra coverage. This coverage is generally very affordable, and in some cases, it covers things not included in your other policies. Minimum coverage starts at $1 million, and that coverage can be increased by increments of $1 million.

Not only does an umbrella policy increase the limits of your existing liability policies, but it actually provides coverage for events not covered by your current liability insurance.